EMMA Special Regime
General information
As a result of the economic situation caused by the Covid-19 pandemic since February 2020, and with the aim of generating jobs and promoting the attraction of Foreign Direct Investment, a new business regime called EMMA (Multinational Company for the Provision of Services Related to Manufacturing).
This new regime is intended to continue the success of the Multinational Company Headquarters (SEM) program, and is oriented towards foreign and Panamanian companies (that have at least one branch abroad) of services related to manufacturing, assembly, re- manufacturing, conditioning, maintenance and repair of products, as well as logistics services, among others.
Companies within the EMMA program may establish themselves in one of the national special economic areas (Free Trade Zone and Panama Pacifico) or in a customs control and surveillance area, in accordance with national laws. EMMA companies benefit from the guarantees of Legal Stability for investments for 10 years as established in Law 54 of July 22, 1998 and Executive Decree No. 9 of February 22, 1999, from the moment of its approval, as occurred in 2021, when an EMMA license was approved, with a Total Initial Investment Projection of USD. Approximately 935,000, for a company in the maritime sector based in the Netherlands.
Legal frame
Law 159 of August 31, 2020 that creates the special regime for the establishment and operation of multinational companies for the provision of services related to manufacturing.
Fiscal benefits
- The company is exempt from the payment of Income Tax of the Republic of Panama for the first five (5) years from its registration. After said period, they must pay income tax in the Republic of Panama on the net taxable income derived from the services provided at a rate of 5%.
- ITBMS immunity for services provided by EMMA to subsidiaries that do not generate taxable income in Panama.
- Immunity from payment of dividend tax, complementary tax and branch tax.
- Income tax on capital gains at a rate of 2% for the transfer of EMMA shares.
- Immunity from ITBMS payment for the purchase and import of goods and services in Panama.
- Immunity from the Operation Notice License tax.
- Withholding of 2.5% on amounts remitted to companies established abroad for financing.
- Exemption from import tax on all types of merchandise, products and equipment in general, used for the provision of services related to manufacturing.
- Labor and Immigration Incentives
- Visas for 5 years (extendable for the same term) for permanent personnel.
- 2-year visas (extendable) for temporary personnel at operational or training levels.
Exemption from income tax, social security contributions and educational insurance for personnel who have a Temporary Personnel Visa or Permanent Personnel Visa for EMMA companies.
Tax exemption applicable to household items, when moving to Panama for the first time, for personnel with temporary and permanent visas for multinational companies.
Requirements
Those interested companies must proceed to send the request in writing to the technical secretariat of the Multinational Company Licensing Commission, by means of a form, their expression of interest and supporting documentation.
The following aspects will be taken into consideration for the evaluation process:
Assets
- The locations or affiliated companies, parent company or operating subsidiaries of the company.
- The commercial or industrial activities or operations carried out by the company.
- The share price on the stock market.
- The minimum number of employees and annual operating expenses.
- Any other element or information that the Commission considers.
All those multinational companies that benefit from this regime must operate as a foreign company registered in Panama or as a Panamanian company owned by the multinational company, its subsidiaries or its affiliates.
Multinational Companies that are operating in Panama and provide services related to manufacturing or those that already have a license covered under the SEM regime and that wish to increase or expand activities related to manufacturing, may benefit from the EMMA regime.
Likewise, companies with an EMMA license must carry out knowledge exchanges and training for national personnel, for which they will be obliged to create a teaching center within their facilities or, failing that, acquire programs through universities.
Activities
- Services related to the manufacture, assembly, re-manufacturing, conditioning, maintenance and repair of products, machinery and equipment.
- Product development, research or innovation services for existing products or processes provided to companies of the Business Group.
- Analysis services, laboratories, tests or others related to the provision of services related to manufacturing, provided to companies of the Business Group.
- Logistics services such as storage, deployment and distribution center of components or parts, required for the provision of services related to manufacturing.
